The UK's cost to meet its ambitious net-zero and clean power goals is a massive $667 billion, or £500 billion, which would be heavily front-loaded capital expenditure that will hurt businesses and bill payers, according to trade association Energy Industries Council.
Estimates from the Climate Change Committee (CCC) and the Confederation of British Industry (CBI) suggest that the necessary energy and energy infrastructure projects, including renewable energy, grid, and transmission upgrades and expansions, would cost £500-600 billion, or $667 billion-$800 billion, Stuart Broadley, CEO of the Energy Industries Council, wrote in Energy Voice.
The costs of the green transition, therefore, would also include front loaded capital expenditure – a premium the UK will be paying for its green policies. This premium, to be paid in the race for accelerated net-zero energy development, would come at an economic cost for the UK.
“By forcing the domestic grid to decarbonise at an accelerated pace, the UK is effectively accepting a unilateral economic penalty compared to its global competitors,” Broadley said.
“The decision to pursue an aggressive emission reduction pathway, honourable and necessary as it may be, is an explicit choice to accept a guaranteed 10-year cost premium.”
The high upfront financial commitments to accelerate the green transition mean that “For the next decade, British businesses and consumers will continue to foot the bill for this half-trillion-pound structural bridge toll,” Broadley said.
The government could create effective energy organizations to resolve the policy dilemma, the industry executive said. The Energy Industries Council (EIC) floated the idea the UK government to establish two new independent bodies, an Energy Cost Reduction Committee and an Energy Sovereignty Committee. These two committees could give expert advice from experts not only on climate targets but also on economic costs and national energy security.
Last month, the UK’s Climate Change Committee (CCC) said that the slower-than-expected electrification exposes households to fossil fuel price shocks. The committee urged faster electrification and recommended the removal of remaining policy costs from electricity bills.
By Michael Kern for Oilprice.com
